Tencent puts $63 million in Flipkart when India-China border tension is on the boil

New Delhi: Amid the ongoing tensions with Beijing, Chinese technology conglomerate Tencent has invested $62.8 million in Walmart-owned e-commerce firm Flipkart, according to regulatory filings of the holding company in Singapore. The fresh infusion is likely a part of Flipkart’s $1.2 billion round that was led by the American retail behemoth in July this year. 

At present, the development assumes significance amid heightened tensions at the border with China, including the Chinese app ban and the amendments to the foreign direct investment (FDI) rules and pre-clearance procedures on investments from China. Many industry experts are of the view that though the infusion is small, it is crucial because the Bengaluru-based e-commerce titan is the most valued internet firm in India. More importantly, since April the Centre took several steps to restrict Beijing's exposure to Indian businesses.

Flipkart valuation

Filings were sourced from business intelligence platform Paper.vc, that says Tencent owns 4-5.3% stake in Flipkart, where Walmart is the largest shareholder with over 80% stake. In July, the US-based retail major had said it led a $1.2 billion investment in Flipkart’s commerce business, valuing it at $24.9 billion.

Tencent said it would open a new office in Singapore to be its regional hub for Southeast Asia, it seems to give a conflicting signal about its India strategy. Recently, several news reports mentioned that Tencent was offloading a part or its entire holding in Indian gaming platform Dream11. The latest fund infusion in Dream Sports—the parent company of Dream11—is likely to reduce Tencent's stake in the company to a single digit. Tencent had led a $100 million funding round in Dream11 in September 2018.

Experts say the latest infusion is Tencent’s plan to restructure portfolio and investment strategy to negotiate measures adopted by India, curtailing opportunistic takeover and acquisitions of Indian companies.